Parents and Adult Children Need Retirement Planning Talk

Fidelity Investments’ Intra-Family Generational Finance Study found one-quarter (24%) of adult children believe they will have to help their parents financially in retirement, while nearly all (97%) parents say they will not need help.

Approximately 95% of parents and their adult children say at least some conversations have taken place, but very few adult children believe the conversations were very detailed. Sixty-five percent of adult children and parents agree that discussing retirement readiness is an important topic, but 72% disagree on the level of detail that has been covered to date; and only 11% of children believe the conversations were very detailed.

In addition, the study revealed 97% of parents and children disagree about whether a child will take care of his or her parents if they become ill.Major miscommunication also exists when discussing inheritance and estate planning; on average, children are underestimating the value of their parent’s estate by more than $100,000.

While nearly nine in 10 (89%) adult children and parents agree that health and eldercare is an important topic of conversation, 63% disagree on the level of detail that has been covered to date.Only 10% of children believe the conversations were very detailed. Eighty-nine percent of adult children and parents agree estate planning is an important topic to discuss, but 70% disagree on the depth of the conversations that have taken place, and only one in five (19%) children say the discussions have been very detailed.

Why Aren’t They Talking?

While more than nine in 10 (94%) adult children and their parents agree it is important to have frank conversations about wills and estate planning, eldercare or covering retirement expenses, there are significant barriers to even starting these discussions within families.The top barrier noted by 30% of parents is they do not want their adult children to overly rely on a potential inheritance, and the top barrier for adult children (40%) is that they feel like it is not any of their business to ask their parents about these topics.

When asked who they are comfortable with when talking about their financial situation, the study found that both parents (68%) and their adult children (60%) feel more comfortable discussing with a third-party financial professional than to each other.

Only one in three (34%) respondents agree on the best time to start these discussions.Parents are more likely to cite when they near or enter retirement (37%) as the right time, while children indicate they would like to have a conversation before their parents retire or have health issues (37%).

When adult children and their parents had detailed conversations about these critical topics, 83% agreed the other was willing to talk about wills and estate planning, eldercare or covering retirement expenses. Peace of mind of parents jumps from 61% to 91% when comparing those parents who have not had detailed conversations with their adult children versus those who have.Additionally, parents who have had detailed conversations with their adult children feel significantly more at ease about their children’s financial future—68% versus 30%—among those who have not had detailed conversations.